GOP divisions give Dems leverage on debt showdown

Six days before a potentially devastating credit downgrade that could add $100 billion a year to deficits in higher interest costs — as much as the intial spending cuts Washington is fighting over — the stalemate over the debt ceiling continues, with no plan that can pass a Republican House and a Democratic Senate.

It was just last December that both parties and the Obama administration congratulated themselves on passing a two-year extension of the Bush-era tax cuts — most of which went to the middle class, not upper-income taxpayers — that lost $3.9 trillion in revenue over the next decade. That is way more than either party is proposing now in savings, including the $3 trillion Republicans have offered.

Democrats appeared to be gaining leverage. House Speaker John Boehner, R-Ohio, already facing a conservative rebellion on his two-step, $2.7 trillion plan, took a blow from the Congressional Budget Office, which said his bill cuts just $850 billion over 10 years, not $1.2 trillion. Embarassed GOP leaders have postponed a vote to tomorrow and are struggling to get the Tea Party on board. Business groups are showing rising frustration, with the National Association of Manufacturers and the Chamber of Commerce weighing in to support Boehner.

Democrats are trying to build leverage for the plan by Senate majority leader Harry Reid, D-Nev., that would cut something more than $2 trillion but gets there mainly by counting savings already expected by winding down the wars in Iraq and Afghanistan. It contains no new revenue and does nothing on entitlements.

Both plans would dump all the hard decisions on taxes and entitlements on a bipartisan super-committee that could end up just as deadlocked a few months down the road. The key difference is a GOP demand to force another debt-ceiling showdown in six months; Democrats insist they will not agree to anything that does not extend the debt-ceiling through the 2012 election.

The end game is fast arriving. Look for some weak, panicked compromise between Boehner and Reid, composed mainly of paper. House minority leader Nancy Pelosi, D-San Francisco, will be needed to get enough Democratic votes to force it through the House. For all her supposed faults, Pelosi never lost control of her caucus the way Boehner has lost control of his.

Republicans will have sacrificed a rare chance at entitlement reform to freeze in place a terrible tax code and save a bloated and overextended military.

Democrats will have protected an out-of-control Medicare program from even the slightest trims and sacrificed domestic spending on real investments in transportation, education, the environment and the rest of the domestic agencies that are not the source of chronic deficits.

President Obama, who talked the game of deficit reduction from his first days in office but was AWOL at every turning point — most especially when he dismissed the findings of his own Bowles-Simpson deficit commission — will emerge not as the centrist savior he hoped to be, but a weakling to his own faithful.

Rep. John Conyers, D-Mich., railed today against Obama at a press conference by the Out of Poverty Caucus, led by Rep. Barbara Lee, D-Oakland. Recalling that he was the first lawmaker to support Obama’s first election campaign, Conyers said, “He’ll be wondering where all those people who were so enthusiastic three years ago went.”

Even the Tea Party is taking its lumps from the hard-core Wall Street Journal editorial page, which notes that some conservatives don’t know when to declare victory: “The idea seems to be that if the House GOP refuses to raise the debt ceiling, a default crisis or gradual government shutdown will ensue, and the public will turn en masse against…Barack Obama. The Republican House that failed to raise the debt ceiling would somehow escape all blame. Then Democrats would have no choice but to pass a balanced-budget amendment and reform entitlements, and the tea party Hobbits could return to Middle Earth having defeated Mordor.”